According to the survey by the company which owns the UK's largest lettings agent network, including national chains Your Move and Reeds Rains, 28% of landlords intended to expand their portfolio in the next year. Landlords with five or more properties, are more likely increase their involvement in the private rental sector – with four in ten saying they expected their portfolios to grow, compared to 26% of smaller scale landlords (with less than 5 properties).
Overall, just under half (48%) of landlords believe now is good time to invest in property, remaining consistent with the response of January’s sentiment survey (49%). Just 2% believe now is a good time to sell their properties. Growing tenant demand has driven increased optimism. 46% of larger scale landlords have witnessed growing tenant demand, compared to 37% of smaller scale investors. Only 7% of all respondents saw a decline, while 64% believe tenant demand will grow in the next 12 months.
David Brown, commercial director of LSL Property Services plc, commented: “Optimism is flooding back into the buy-to-let market. Underlying factors like tenant demand continue to improve, despite the doubling of the stamp duty threshold for first-timers. With total annual returns hitting 13.3%, many potential investors are looking at property as a lucrative long-term venture.”
Mortgage financing remains the primary obstacle to investment. According to the CML, in 2009, there were only 93,500 buy-to-let mortgages – just over a quarter of 2007 levels. In the past year, just a quarter of large scale landlords were able to raise mortgage finance (23%), compared to 11% of small scale landlords. Nearly two-thirds (61%) found it harder than three years ago – with 28% stating it was much more difficult. In contrast, one in ten of all respondents had bought properties with cash in the past year.
David Brown said: “Undeniably, the difficulty in obtaining mortgage finance is holding back investment in the private rental sector. Over 90% of buy-to-let products have vanished from the market as lenders continue to keep their purse-strings drawn tight. Landlords with larger portfolios tend to have larger amounts of equity, and are finding mortgaging distinctly easier than small scale investors - but lending criteria remain too tight generally. Thousands of would-be investors are being deterred from entering the market, although established large scale investors are better placed to grow their portfolios in the current market.”